NEW DELHI: Prime MinisterManmohan Singh has termed the twice scaled-down average growth target of 8% for the 12th Five-Year Plan period as "ambitious", and warned against business-as-usual policies while pitching for tough decisions, especially on energy prices. "I must emphasise that achieving a target of 8% growth, following less than 6% in the first year, is still an ambitious target," Singh said in an address to the National Development Council (NDC) comprising cabinet ministers and state chief ministers.

NDC on Thursday approved the 12th Five-Year Plan.

India's economic growth for the fiscal year ending March is expected to be 5.7-5.9%, the slowest since 2002-03, according to the latest government estimates. The economy expanded 6.5% in 2011-12, dragging down average growth rate during the 11th Five-Year Plan period to 7.9%. For some three years prior to the global financial meltdown of 2008, India's economic growth averaged more than 9%.

For the latest plan period to end-March 2017, the Planning Commission has already cut the average growth estimate twice. The first cut to 8.2% from 9% happened in April this year, and the growth figure has once again been nudged down to 8% because of the lingering economic crisis in the Western economies and sluggishness at home.

Singh said return to rapid growth was necessary to achieve inclusiveness, and the 12th Plan strategy contains many elements that will ensure it.

The PM expressed hope that steps such as the setting up of the Cabinet Committee on Investment will help tackle the issue of delay in clearances and implementation of large projects. "Our priority must be to reverse this slowdown... We cannot change the global economy, but we can do something about the domestic constraints that have contributed to the downturn," he said.

Singh pitched for increase in prices of petroleum products, coal and power, saying they were underpriced, and cautioned that a failure to control subsidies would lead to a cut in Plan expenditure. "Unfortunately, energy is underpriced in our country. Our coal, petroleum products and natural gas are all priced below international prices...This also means that electricity is effectively underpriced, especially for some consumers," he said, calling for a phased price adjustment to correct the situation.

Singh said energy experts were unanimous that the country cannot expect to achieve rapid, inclusive and sustainable growth if it is not willing to undertake a phased adjustment in energy prices to bring them in line with world prices.

The government last September raised diesel prices by an unprecedented 12% and imposed a cap on the number of subsidised cooking gas cylinders per household, decisions praised by the markets and welcomed by economists as vital to cut a burgeoning subsidy bill that threatens the economy's fiscal health.

The prime minister said some subsidies were a normal part of any socially just system, but they should be well designed and effectively targeted. The total volume must be kept within limits of fiscal sustainability.

The government, faced with the threat of downgrades by international credit rating agencies, has announced a fiscal consolidation road map that seeks to restrict fiscal deficit at 5.3% this year and bring it down to 3% by the end of the 12th Plan. The revised target is worse than the original target of 5.1% indicated at the start of the year, but still better than 5.9% last year.